Slide 1: Refreshing Broadwind, Inc.
Refreshing Broadwind, Inc.(NASDAQ: BWEN) Replacing three entrenched directors to bring fresh thinking and greater accountability WM Argyle Fund | May 2023
Slide 2: Table of Contents
The Need For Shareholder-Driven ChangeTABLE OF 1 2 A Reactive, Defensive and Scared BoardCONTENTS 3 The Three Opposed & Entrenched Directors Poor Track Records 4 Broadwind’s Misleading Claims 5 Broadwind’s Lack of Strategy 6 Our Plan & Nominees
Slide 3: About WM Argyle Fund
About WM Argyle Fund• Owns 207,200, approximately 1%, of the outstanding common shares of Broadwind• Single purpose investment fund specifically created to invest in Broadwind• Looking to ensure the long-term performance of the Company by reconstituting the Broadwind Board with new members• We are s
Slide 4: About Broadwind, Inc.
About Broadwind, Inc.SummaryPublicly traded micro-cap company specializing in heavy manufacturing Formed in 2006 via a reverse merger Oldest operating company founded in 1926 Own $288M in Net Operating Loss’s (NOL’s) Employees: ~500 (millions of USD) 2017 2018 2019 2020 2021 2022 Revenue $146.8 $125
Slide 5: 1. The Need for Shareholder-Driven Change
1. The Need for Shareholder-Driven Change
Slide 6: The Lost Decade
The Lost DecadeIn the last 10 years, the Company's stock price has performed poorly by losing -17.1%
Slide 7: The Lost Decade
The Lost DecadeThree instances of significant and quick speculation followed by equally quick crashes
Slide 8: Performance compared to Benchmarks
Performance compared to Benchmarks-17.13% 108.54% 89.61% 178.43% Performance compared Benchmarks
Slide 9: Performance compared to Benchmarks
Performance compared Benchmarks-34.19% 13.48% 51.73% 112.34%
Slide 10: Performance compared to Benchmarks
Performance compared to Benchmarks7.83% 9.09% 13.47% 69.26%
Slide 11: Performance compared to Benchmarks
Performance compared to Benchmarks-4.79% -22.91% -46.22 -6.05%
Slide 12: Performance compared to Benchmarks
Performance compared to Benchmarks
Slide 13: The Board shouldn't be rewarded for Inflation Reduction Act benefits
The Board shouldn’t be rewarded for Inflation Reduction Act (IRA)IRA benefits • Extension of the Production Tax Credit (PTC) for developers of wind power • Manufacturer tax credit for manufacturers of clean technology The stock price is independent of benchmarks and the market• Low correlation betwe
Slide 14: Long Track Record of Losing Money
Benchmarks matter, but absolute performance matters tooLong Track Record of Losing Money (in millions) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Net Income -$17.9 -$10.5 -$6.2 -$21.8 $0.3 -$3.6 -$24.1 -$4.5 -$1.5 -$13.3* -$9.7• 2016 is the only profitable year as a public company• Accum
Slide 15: A growing Net Operating Loss pile that might disappear
A growing Net Operating Loss (NOL) pile that might disappear• NOL’s are growing due to continued poor performance• NOL’s nearly doubled in the last decade• Roughly $228 million of the $288 million NOL’s begin to expire in 2026• Yearly use limited to $14 million• Management claims a focus on using th
Slide 16: Fabrication Segment: Poor Profit Margins Compared to Peers
Fabrication Segment: Poor Profit Margins Compared to Peers• This segment accounted for 66% of total revenue for FY 2022• Primarily makes wind towers and industrial fabrications• Arcosa (NYSE:ACA) is a major wind tower peer• Comparing fabrication segments 2016-2022• Arcosa average operating margin of
Slide 17: Gearing Segment: Stagnant and Losing Money
• This segment accounted for 24% of total revenue for FY 2022• Produces gears and gearboxes for industrial and wind power applications • Between 2016-2022• Revenue between $20 and $43 million.• Materially profitable only once• Sales increased 49% in FY 2022, still wasn’t materially profitable
Slide 18: Industrial Solutions: Strategy & Execution Failure
• This segment accounted for 10% of total revenue for FY 2022• Segment manages supply chain, inventory and kitting/assembly for primarily natural gas turbine market• Segment was created through the 2017 Red Wolf acquisition and by organically investing into natural gas compression products• Goal was
Slide 19: The failed Red Wolf acquisition: Projections vs Results
The failed Red Wolf acquisition: Projections vs ResultsAcquisition Projections Acquisition Results • Immediately accretive • Has never been accretive • Earnings shielded by NOL’s • Creates NOL’s, does not use them • Combine Red Wolf with the Company's organic • Exited the organic CNG business after
Slide 20: Not just Red Wolf – A trail of acquisition disasters
Not just Red Wolf – A trail of acquisition disasters • Wrote-off substantially all non-fabrication acquisitions within 1-3 years of purchase• All purchased under the guise of “strategic”, yet many were later sold at a loss• Acquisitions continued to generate NOL’s• Last four acquisitions have result
Slide 21: History of diluting stockholders
History of diluting stockholders• Shares outstanding increased from 9.6 to 21.1million 21.1 million over 14 years 2022 • Moreover, the Company provided significant equity to the insiders and directors who presided over stagnation• 2023 Proxy seeks further increase in9.6 million authorized shares iss
Slide 22: What about the employees?
What about the employees? Employee morale is low www.Glassdoor.com www.Indeed.com
Slide 23: Failure to appoint a full-time CFO
Failure to appoint a full-time CFO for over 11 months• On September 2, 2021, Jason Bonfigt delivered his resignation as CFO, effective October 1, 2021• On October 1, 2021, the Company appointed its CEO, Eric Blashford, as interim CFO• After 11 months, on August 10, 2022, the Company appointed Thomas
Slide 24: Failure to communicate the incapacitation of the then Chairman
Failure to communicate the incapacitation of the then Chairman• On March 1, 2020, Ms. Kushner was appointed Chairman of the Board• Tragically, Ms. Kushner was involved in a serious accident on November 7, 2021, which rendered her incapacitated and unable to serve in her role• However, the only notic
Slide 25: Violated credit agreement after months
Violated credit agreement after 5 months• The Company entered into a new credit facility with a new lender on August 4, 2022• On February 14, 2023 the Company disclosed they defaulted on the credit agreement due to failure to meet a December 31, 2022 TTM EBITDA covenant• This is not even 5 months af
Slide 26: Execution risk is too great with the current Board
Execution risk is too great with the current Board• The stock has underperformed for years• The financial performance of the Company has been stagnant for a decade• The Company has essentially been exclusively unprofitable• No urgency to become profitable• No urgency to benefit from the NOL’s• No su
Slide 27: 2. A Reactive, Defensive, and Scared Board
2. A Reactive,Defensive,and Scared Board
Slide 28: The Board is reactive, defensive, and scared
The Board is reactive, defensive, and scared• When we reached out to the Board in July 2022, we wanted to discuss several issues• Poor performance• Long-tenure of several directors• The lack of diversity• Vacant Board seats from previous directors leaving• After multiple requests to meet with the Bo
Slide 29: The Board has decided to waste an estimated $1.6 million on their defense
• The Board has decided to waste an estimated $1.6 million on their defense• This is a whopping 13% of the Company’s precious cash balance• While the Company claims it has $12.7 million in cash, this figure includes $34.6 million in customer deposits• Customer deposits are a liability on the balance
Slide 30: The Board is scared, and its actions prove it
The Board is scared, and its actions prove it• They have hired some of the best advisors money can buy to defend them• They make personal attacks on our nominees’ character and careers• Because they can’t defend their own track record of poor performance• They think only C-suite officers contribute
Slide 31: 3. The Three Opposed & Entrenched Directors Poor Track Records
3. The Three Opposed & Entrenched Directors Poor Track Records
Slide 32: Remove Three Entrenched Directors
REMOVE THREE ENTRENCHED DIRECTORS Until these three directors are removed, we believe the culture of the Company’s boardroom will not meaningfully change.Cary B. Wood • Director since May 2016• Chairman since April 2022David P. Reiland • Director since April 2008 • Chairman, 2010-2020 Thomas A. Wagn
Slide 33: Opposed directors' track records since their tenure began
Opposed director’s track records since their tenure began David P. Reiland • 15-year Tenure, 10-years as Chairman• Accrued -$334 million deficit during tenure• Highlights: SEC fine while Audit Committee member; Red Wolf; strategic plan failure; failed to disclose an incapacitated Chairman; and viola
Slide 34: Mr. Wood was pushed out as CEO by angry shareholders
Mr. Wood was pushed out as CEO by angry shareholders• Mr. Wood served as CEO and director of Sparton Corporation from November 2008 until February 2016• After activist shareholders complained about poor performance and failure to reach goals set out in a strategic plan, the Sparton Board terminated
Slide 35: Mr. Wagner led product development of a product that failed
Mr. Wagner led product development of a product that failed• Mr. Wagner was the Chief Product Officer at Ogin, Inc. from July 2012 until October 2015• He led the product development and deployment of a shrouded wind turbine• Ogin raised $150 million in capital• The company shuttered after the produc
Slide 36: A promotion to CEO shortly after SEC sanctions
A promotion to CEO shortly after SEC sanctionsBackground: Material weakness and SEC notice • In January 2014, Broadwind stated that the financial statements for the period from March 2013 to June 2013 should no longer be relied upon• The SEC sent a notice to the Company they failed to ensure that th
Slide 37: A promotion to CEO shortly after SEC sanctions
A promotion to CEO shortly after SEC sanctionsMs. Kushner paid a fine to SEC for her failure to ensure proper accounting disclosure • In February 2015, the Company entered a $1 million settlement with SEC • Ms. Kushner paid a penalty of $73k Within a year, she was added to the Board, upon the recomm
Slide 38: The Opposed Directors have been compensated well
The Opposed Directors have been compensated well• As far as we can tell, none of the opposed directors Opposed Director Share Ownershippurchased shares using their own funds• Opposed Directors own approximately 1.6% of the Company solely through their share grants• Despite losing $9.7 million in 202
Slide 39: 4. Broadwind's Misleading Claims
4. Broadwind’s Misleading Claims
Slide 40: Reality #1 and #2: Denied meetings and control claims
“Lies aren't answers. "But they sound so much better than the truth.” -Alexander Christo, To Kill a KingdomReality #1 250 days of denial is NOT an earnest effort Reality #2 Seeking three Board seats is NOT equal to taking controlJULY 5, 2022 JULY 25, 2022 AUGUST 17, 2022 SEP 20, 2022 OCT 12, 2022 MA
Slide 41: Company's claim: seeking to take control of your company
Company's claim “WM Argyle Fund is seeking to replace three of our directors with a director slate of its own, effectively taking control of your company.”• We are currently seeking three Board seats out of seven Board seats Reality • The Board is trying to scare employees and shareholders with such
Slide 42: Company's claim: non-wind revenue growth
“In fact, over the last five years, Broadwind grew its annual non-wind revenue by Company's claim 45% to $90 million through expanded relationships with new and existing partners.”• The Company likes to conflate revenue with profit Reality • Given that the entire Company is still unprofitable, we qu
Slide 43: Company's claim: deploying capital effectively
Company's claim “Broadwind is deploying capital effectively, laying a strong foundation for long-term value creation”Reality We are really scratching our heads a) Liabilities increased by 424% b) Shares diluted by 45% c) Stock price crashed by 81% Are these the outcomes of deploying capital effectiv
Slide 44: Reality #5
Reality #5 Destroying shareholder value does not qualify as effective capital deployment claim creation” “Broadwind is deploying capital effectively, laying a strong foundation for long-term value Reality We are really scratching our heads a) Liabilities increased by 424% b) Shares diluted by 45% c)
Slide 45: Reality #6: Bucyrus experience
Reality #6Company’s claim “All three of WM Argyle’s nominees were employed at Bucyrus, a global mining company that was sold to Caterpillar in 2011. Despite WM Argyle’s claims, this is not relevant experience to Broadwind: Bucyrus had significantly different products, structure, customers, and end m
Slide 46: Broadwind and Bucyrus
Broadwind and BucyrusBroadwind struck a deal with Bucyrus/Caterpillar to supply sub-assemblies. Roughly four years ago, Broadwind's executive claimed that Caterpillar is a top customer. Broadwind's Manitowoc plant to supply Caterpillar “Under the deal with Caterpillar, Broadwind will supply the form
Slide 47: Broadwind and Bucyrus: mining exposure
Broadwind and BucyrusMining is an important industry for Broadwind. Its exposure affects the Company's topline significantly. “The pace of order growth from industrial, mining and steel processing is significantly outpacing that from our oil and gas customers…” -Eric Blashford, Current CEO, Broadwin
Slide 48: Reality #7 and #8
Reality #7 Our nominees reported to, or were, top executives at Bucyrus Reality #8 A company is not a dictatorship, leaders need good adviceCompany's claim “As far as we can tell, WM Argyle’s nominees were mid-level employees in Bucyrus....”
Slide 49: Reality #8: leaders need good advice
Reality #8 A company is not a dictatorship, leaders need good advice (ey) sy-l\asse) “WM Argyle’s nominees.....do not appear to have had decision-making authority in the ultimate claim acquisition of Bucyrus by Caterpillar.” ¢ Mr. Robinson was intimately * On November 3, 2010, our board of directors
Slide 50: 5. Broadwind's Lack of Strategy
5. Broadwind ’s Lack of Strategy
Slide 51: The Board is banking on tax credits for profitability
The Board is banking on tax credits for profitabilityCompany's argument: “Broadwind is a key beneficiary of the Inflation Reduction Act (“IRA”) of 2022, which positions us to deliver significant margin expansion and improved profitability” • The incumbent directors are asking the shareholders to vot
Slide 52: The Board is taking credit for an industry rebound
The Board is taking credit for an industry reboundIn January 2023, Broadwind announced a transformative $175 million tower order with a major wind turbine OEM • The Company blamed the two years of poor performance on the challenging industry• However, the Board now takes credit for the orders receiv
Slide 53: The Board's Vision 2025 looks awfully familiar
The Board’s “Vision 2025” looks awfully familiarThis is Sparton Corp 2.0! They need 8-years for a 3-year plan, how long do shareholders need to wait?
Slide 54: 6. Our Plan & Nominees
6. Our Plan & Nominees
Slide 55: Our Plan
Our Plan• Enhance Corporate Governance – Director compensation should be reduced until the Company reaches sustained profitability. Align executive pay with rigorous performance metrics. Address the shareholder dilution in the proposed equity plan. Increase communication with shareholders, employees
Slide 56: Assess Management and Improve Human Capital
• Assess Management and Improve Human Capital – We need an assessment of management’s capabilities to ensure the Company has a leadership team that is capable of accomplishing the strategic plan. The ideal team will include individuals with deep experience across engineering, manufacturing, sales, s
Slide 57: Our Plan
Our Plan• Prioritize Transparent Investor Relations – The Company needs to host a public investor day open to all investors not just investors management prefers. We need to regularly publish KPI’s such as backlog, install base, new product revenue, and profitability metrics• Explore Accretive M&A t
Slide 58: Our Plan
Our Plan• Calling for Immediate reduction in Board compensation until profitability is reached• All Executive and Board stock ownership requirements reduced to 3-years from 5-years• Directors and Executives must invest directly into the Company with their own money• Increase stock ownership requirem
Slide 59: Our Nominees
RYANMEET BOGENSCHNEIDER OURNOMINEESJAMES M. ROBINSON IV
Slide 60: Ryan Bogenschneider
Ryan Bogenschneider is the founder and has served as Principal of The Western Metropolis Company, a management and consulting company, since January 2013. Western Metropolis focuses on corporate development activities such as mergers & acquisitions, growth strategies, and recapitalizations. Mr. Boge
Slide 61: Qualifications of Ryan Bogenschneider
Qualifications of Ryan Bogenschneider • Corporate Development Consultant• Clients include HVAC, Oil & Gas filtration, and +$100 billion multinationals, among others• Includes working with the BWEN board in 2016 to discuss Company leadership, corporate structure, operations, financial performance, an
Slide 62: Christine M. Candela
Christine M. CandelaSince April 2022, Christine M. Candela has served as Director, Compensation and Benefits of IDEMIA, a global technology firm. From March 2020 to January 2022, she served as Senior Director, Total Rewards, of REV Group, Inc., a designer and manufacturer of specialty vehicles and r
Slide 63: Qualifications of Christine M. Candela
Qualifications of Christine M. Candela• Selected to oversee a full-scale, two-year global HR integration due to Caterpillar’s acquisition of Bucyrus International, which involved integrating 10,000 employees in 30 countries into new benefits and compensation programs in three distinct phases.• Execu
Slide 64: James M. Robinson IV
James M. Robinson IVMr. Robinson is a founder, and since September 2018 has served as Managing Member, of Newel Capital LLC, a private equity firm that invests in manufacturing companies. From March 2012 to September 2018, Mr. Robinson served as Senior Vice President and Secretary of the Kohler Co.
Slide 65: Qualifications of James M. Robinson IV
Qualifications of James M. Robinson IV• Currently, Founder of Newel Capital• President of multimillion-dollar metal fabricating portfolio companies (operational experience)• General Counsel for two multibillion-dollar revenue manufacturing firms• Bucyrus International ($4 billion) with 10,000 employ
Slide 66: Our Board nominees have experience the incumbents lack
Our Board nominees have experience the incumbents lackSubject Matter Expertise Mr. Bogenschneider • Strategy • Corporate Development Ms. Candela• Human Resources• Compensation & Benefits Mr. Robinson• Legal• M&A• AdministrationLarge Fabrication Gear Manufacturing Incumbent Directors Mr. ReilandMr. W
Slide 67: Our slate is the right solution for stockholders
We assembled a slate with the experience, expertise and track record required to deliver long-term shareholder value OUR SLATE IS THE RIGHT SOLUTION FOR STOCKHOLDERS
Slide 68: Support our nominees and remove the three entrenched directors
SUPPORT OUR NOMINEES AND REMOVE THETHREE ENTRENCHED DIRECTORS TO UNLOCK VALUE